The lifetime prevalence of posttraumatic stress disorder (PTSD) is approximately 30% among Vietnam Veterans and 11-17% among Iraq and Afghanistan Veterans. PTSD is associated with enormous health care costs, increased suicidality, depression, poorer quality of life and functioning, physical health, and increased substance use. Prolonged exposure (PE) is an efficacious treatment for Veterans with PTSD that decreases avoidance of feared, but safe, cues. Despite PE being one of the best available treatments for PTSD, 25 to 45% of PTSD patients still meet diagnostic criteria following treatment. High rates of comorbid disorders, such as insomnia, may interfere with the efficacy of PE and limit long-term rehabilitation outcomes. Among Veterans with PTSD, sleep disturbances are nearly universal with 70 - 87% reporting comorbid insomnia. Untreated insomnia can persist for years, is independently associated with impaired health-related quality of life, does not resolve following PTSD treatment, and can exacerbate daytime PTSD symptoms. Importantly, insomnia may interfere with the mechanisms of PE through safety learning, habituation to feared stimuli, emotional coping, emotional processing, and cognitive abilities necessary for successful treatment. Despite this, insomnia is not a primary intervention for Veterans with PTSD. Given these factors, it is critical to evaluate whether treating insomnia prior to PTSD will improve PTSD symptoms and quality of life outcomes. Cognitive behavioral treatment for insomnia (CBT-I) is the first line treatment of chronic and severe insomnia, which produces lasting improvements in sleep. By using CBT-I prior to, and integrated with, PE offers several novel advantages that will: 1) increase client-centered treatment by addressing the number one subjective complaint among Veterans with PTSD; 2) enhance PTSD outcomes and non-response rates by addressing insomnia-related factors that interfere with PTSD treatment; 3) act as a stepping stone and help to engage patients who are not initially willing to engage in trauma-focused PE; 4) increase rehabilitation outcomes by addressing the two leading disorders that independently affect quality of life for Veterans; 5) allow patients to address both symptoms of insomnia and PTSD within a shortened timeframe; 6) increase continuity by allowing patients to work with a single provider; and 7) decrease the risk of attrition between referral clinics and waitlists. To date, no studies have capitalized on available evidence-based CBT-I prior to PE to improve insomnia, PTSD, and quality of life outcomes. The proposed CDA-2 randomized control trial will evaluate the efficacy of integrating evidence based CBT-I into PE (CBTI-PE) compared to a non-active sleep component plus PE (hygiene-PE) to optimize PTSD, sleep, and quality of life outcomes in 90 Veterans. Our research has three overarching aims: Aim1 (primary outcome): Investigate the efficacy of CBTI-PE compared to hygiene-PE on PTSD symptoms among Veterans with comorbid PTSD and insomnia. Aim 2 (secondary outcomes): Examine the effects CBTI-PE on sleep and quality of life outcomes, when compared to a control group, in male and female Veterans with comorbid PTSD and insomnia. Aim 3 (Mediation): Investigate whether sleep mediates the relationship between treatment group and the decreases in PTSD symptoms. Approaching insomnia as an independent target integrated with PE represents a logical, innovative, and empirically-informed method for augmenting existing treatments and optimizing outcomes consistent with the 2014-2020 VHA Strategic Plan. Findings from the proposed study will directly inform clinical practice by investigating whether treating insomnia together with PTSD increases the recovery from insomnia, PTSD, and quality of life outcomes. This translational program of research will help vulnerable Veteran populations achieve optimal and enduring recovery outcomes as well as lay the groundwork for future studies to further investigate the mechanisms between insomnia and PTSD treatment outcomes and other comorbid disorders.